© 2010 Metal Treating Institute

Three Forces That Will Drive Outsourcing

In today’s economy, emerging technology developments, changing consumer buying habits, and demographic shifts are all working in unison to change what, and how, consumers and customers are purchasing products and doing business.  It is vital to any manufacturer to enhance their operations in order to maximize productivity and throughput in production, allowing them to take advantage of the growth opportunities in the future.

 

It is projected that people will be a company’s downfall in production in the future, or the lack of qualified people to be more specific.  Three forces will drive forward thinking manufacturers, including heat treaters, to innovate in the area of automation and robotics.  Those who start now will win when future growth hits the heat treating industry.

 

FORCE #1 – LACK OF PEOPLE

Over the past 18 months, more and more MTI members have

stated that it has been months since a potential employee, who

was trainable, had a good work ethic, and wanted to work, has

come through their doors looking for a job.

 

If you look at the demographic numbers, the reason is that

everyone who fits that criteria, is already working.  With a 4.5%

unemployment rate and 9,000,000 fewer people between the

primary working ages of 31 and 52, manufacturers of all types,

including heat treaters, have a serious dilemma on their

hands:  A potential full of growth opportunities, yet not

enough qualified employees to push the product out the door.

 

As Baby Boomers retire, you have 13% fewer people in the

next generation bracket with experience, to fill the many jobs

of those retiring.   This has forced many companies to try to

figure out a way to keep Baby Boomers on past retirement,

or fill the gap with Millenials, who are not far removed from

college.  They have a lot of knowledge and are the most tech

savvy generation in history, but lack the deep wisdom and experience that many companies have

had for decades with the Boomers.

 

With the Millenials being between 13 and 32 years of age, we are still a decade away from all of them being in the workforce, able to make up the difference.

 

FORCE #2 – UBERIZATION OF THE WORK FORCE

Ride sharing services like UBER and LYFT are beginning to become the norm in the world of transportation.  Uber alone is in 70 countries, does over 1,000,000 rides per day, and get this…is now signing on 50,000 drivers a MONTH.  50,000 drivers a month!  Drivers do Uber part- and full-time.  Many doing it full-time earn between $1,000 and $1,400 a week.  This presents a problem for many industries, especially manufacturing.  We already have a low unemployment rate, and now the ride sharing industry is taking upwards of 50,000 people per month out of the hiring pool of potential workers, and into an arena where they drive people around in an air conditioned car, own their time, and have a pretty stress-free day. 

 

FORCE #3 - $15 AN HOUR MINIMUM WAGE POTENTIAL

There have been two states so far to pass $15 minimum wage laws in America.  A third in New Jersey was just vetoed by Governor Chris Christie.  There is no clear direction as of yet as to where the $15 an hour movement will end up, but the question for any company is….“If passed in your state, could you afford $15 per hour for every paid hour of labor?”  This is a real movement that cannot be ignored by the business community.  You will most likely have to come to terms with it at some point.   If passed, your options are to pay people $15 per hour (plus all the benefits and taxes that come with it), automate, or outsource.

 

The question you will want to sit and discuss with your team is,  “How could we grow our business 30% to 40% in the next 10 years without hiring another person?” 

 

Heat treat plants need to be looking for “Smart Technology” that can help them perform “Predictive Manufacturing” and connect their supply chain, both upstream and downstream, to maximize production and throughput.  The companies who figure it out will find solutions for the problems that they face, given the three forces discussed in this article.  Don’t say it can’t be done.  Have the discussion and watch the innovation begin to flow in your plant.  Your employees have a vested interest in seeing innovation happen in your plant to keep it thriving and growing into the future.

 

If you would like more information on the MTI Network of Commercial Heat Treaters click one of the following options:

 

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